The average amount of capital raised by IoT startups in 2022 reached the highest point in over a decade, despite a 22% drop in total funding within the sector and an overall 35% decline in venture capital markets.
IoT companies raising funds in 2022 pulled in $15.9m on average, up 30% from the previous year, reveals new research by Avnet Abacus, an electronics distributor that consults engineers when they’re designing new products. The engineering firm analysed Crunchbase data for companies listed under the Internet of Things to provide insight on the level of investment activity happening within the IoT.
Commenting on the study’s findings, Dr Sara Ghaemi, Avnet Abacus’s Technical Director, says:
“The amount of funding companies receive in any product category gives an indication of how investors view the future for that technology. Despite venture capital generally cooling off due to current economic conditions, the research reveals investor confidence is higher than ever for the long term prospects of companies developing products in the IoT.”
The average size of funding round (or deal size) for companies in the IoT reached $15.9m in 2022, the highest point in 19 years. Matching the global trend, American startups in the sector also saw the highest average deal size in 19 years at $16.2m.
Meanwhile, European IoT companies drew in their highest average funding round ever at $16.7m.
The Industrial IoT also experienced a record year in 2022, where the average funding round reached $16.1m, more than double the average investment of $7.3m in 2021, and the highest since 2006 (a year in which there was only 1 deal on record).
To provide insights on the Industrial IoT, Avnet Abacus analysed Crunchbase data for companies listed under both the Internet of Things and Industrial Automation.
Acquisitions of companies in IoT worldwide were at their second highest ever in 2022 with 116 companies snapped up, marginally down from the peak of 117 companies in 2021. In the United States, 48 IoT startups were purchased in 2022, down from an all-time high of 58 in 2021.
Europe fared even better than previous years with 41 acquisitions making 2022 the continent’s highest year ever for IoT exits.
In both 2018 and 2021, 5 companies in the Industrial IoT were acquired, while 2022 took that to new heights with 7 startups in the sector purchased last year.
While the total amount raised by IoT startups globally dropped from $5.6 billion in 2021 to $4.3 billion in 2022, the money invested in early stage startups was on the rise.
The investment into early stage IoT startups (those seeking funds in venture rounds A and B) reached the highest amount on record last year at $2.45 billion, up 12% from $2.19 billion the previous year.
Meanwhile, the total investment for late stage IoT ventures was $1.08B, down 54% from $2.36B in 2021, and 36% lower than 2020’s figure of $1.70B. Angel and seed investors in the IoT were also proceeding more cautiously last year, providing funds of $261m in 2022 compared to $404m in 2021.
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